Does intellectual property governance crowd out corporate social responsibility? Evidence from China’s demonstration enterprises

This paper examines the impact of China’s National Intellectual Property Demonstration Enterprise (NIPDE) policy on corporate social responsibility (CSR). Using 3352 Chinese listed companies spanning 2010–2020 from Hexun and CSMAR Database and employing a staggered difference-in-differences approach, we find that NIPDE implementation significantly reduces CSR performance by approximately 4.3 points. Mechanism analyses reveal two channels: (1) a resource crowding-out effect, suggesting that firms may reallocate limited resources from CSR to R&D investments, and (2) a reputation substitution effect, where NIPDE-induced reputation improvements mitigate firms’ financing constraints and reduce firms’ reliance on CSR as a legitimacy signal. Moreover, the negative impact on CSR is more pronounced among firms with high financial constraints and high market concentration. Moreover, the decline in CSR performance is concentrated in discretionary stakeholder dimensions, while shareholder responsibilities remain unaffected. Our findings highlight an innovation-responsibility trade-off, underscoring the need for complementary mechanisms within NIPDE policy to prevent unintended consequences for CSR.